Product: Credit Curriculum, Cash Flow

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Description

1. Business Cash Flow

... understanding the borrower by understanding cash flow

In this self-study course, participants review the objectives of the Uniform Credit Analysis (UCA) cash flow statement and the financial statement information required to construct it. They work through the step-by-step construction of the UCA cash flow statement. They examine the information content of the statement and use it to identify borrowing causes, cash sources of debt repayment, the financing requirements, and the cash sources of financing to meet cash shortfalls.

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Target Audience:

Inexperienced analysts and lenders interested in working through the manual construction of the UCA cash flow statement and using the resulting statement to identify the borrowing causes, the cash sources of debt services, the financing requirement, and the cash sources used to meet the financing requirement.

Prerequisites:

General familiarity with accrual financial statements and a basic understanding of accounting.

Objectives:

By the end of this self-study course, participants will be able to:

Explain the structure, composition, and analytical importance of the Uniform Credit Analysis (UCA) cash flow statement.
Manually construct the UCA cash flow statement from income statement and balance sheet information.
Identify the impact of distributions, related party transactions, and shareholder loans in providing or draining cash from a business as well as identify the cash sources of debt service.
Identify the borrowing causes that explain a deficit at cash flow from business operations.
Identify the amount of outside cash required by the prospect or borrower to run all dimensions of the business.
Identify the source of outside financing used to meet the financing requirement.

Credit Curriculum Courses – Cash Flow

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Two to three hours per exercise, depending on the complexity of the issues.

Yes

2. Cash Impact and Sales Neutral Business Cash Income

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... confirming the borrowing causes

In this self-study course, participants work through the computation of the cash impact of sales growth or decline, the cash impact of changes in EBITDA%, accounts receivable days, inventory days, and accounts payable days in arriving at Sales Neutral Business Cash Income. They use the results of the computations to clearly identify or confirm the borrowing causes. They explore the use and application of the financing gap ratio in monitoring and managing business cash flow.

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Target Audience:

Inexperienced analysts and lenders interested in exploring the methodology for quantifying the cash impact of sales growth and other key Business Drivers to correctly identify borrowing causes for a company growing or declining significantly.

Prerequisites:

General familiarity with accrual financial statements and a basic understanding of accounting.

Objectives:

By the end of this self-study course, participants will be able to:

Quantify the cash impact of sales growth or decline in arriving at an estimate for business cash flow absent the positive or negative cash impact of sales growth or decline.
Explain how to interpret and use the UCA cash flow statement adjusted for the cash impact of sales growth or decline in the process of assessing risk.
Quantify the cash impact of changes in EBITDA %, accounts receivable days, inventory days, and accounts payable days.
Use the cash impact of sales growth or decline and the cash impact from movements in EBITDA % and movements in the critical turnover ratios to precisely identify the reasons for an operating cash flow deficit and the need for associated financing.
Identify the beneficial cash impact from freezing the financing gap and, therefore, assess the critical importance of effective balance sheet management.
Assess possible loan covenants that, if honored, would assure a borrower's cash revenue - absent the cash impact of sales growth or decline - to be sufficient to pay interest expense and repay long-term debt as scheduled.

Credit Curriculum Courses – Cash Flow

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Two to three hours per exercise, depending on the complexity of the issues.

Yes

3. Management Assessment and Projections

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... borrowing needs and cash repayment sources

In this self-study course, participants review and examine the competitive forces at work in a borrower's market. They assess the competence of company management and identify management's objectives for company performance. In addition, they adjust "last actual" Business Driver results to reflect anticipated competitive and management realities going forward in the process for generating "most likely" and "downside" projection scenarios. Using projection results, participants identify the likely sources of cash to service interest-bearing debt.

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Target Audience:

Inexperienced analysts and lenders interested in exploring the methodology for shaping forecast assumptions and generating projection scenarios to identify the likely sources of cash to meet interest-bearing debt service.

Prerequisites:

General familiarity with accrual financial statements, perforamnce ratios, and the Uniform Credit Analysis (UCA) cash flow statement.

Objectives:

By the end of this self-study course, participants will be able to:

Implement a projection methodology that focuses on performance values for the Business Drivers across "last actual", "most likely", and "downside" projection scenarios.
Incorporate management objectives in shaping "most likely" assumptions about Business Driver performance.
Identify the competitive forces at work in a specific industry and assess the likely impact on specific Business Drivers and the ripple effect on a company's future operating and cash flow performance.
Identify the management essentials in place and working effectively and the likely impact of their presence or omission on the company's ability to achieve its financial projections.
Determine the appropriate position on the Risk Grid for a borrower based on both "most likely" and "downside" projection scenarios and identify a borrower's ability to meet both necessary conditions for business success under both projection scenarios.
Identify appropriate loan covenants that serve to influence borrower performance in satisfying both necessary conditions for business success if the loan covenants are honored as events unfold.

Credit Curriculum Courses – Cash Flow

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Two to three hours per exercise, depending on the complexity of the issues.

Yes

Credit Curriculum

II. Credit Curriculum: Cash Flow - Overview

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Credit Curriculum

II. Credit Curriculum: Cash Flow - Overview

Target Audience

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